When did you start in the Industrial Parks business and what motivated you?
Back in the early 60’s, we (a group of about 10 Juarez entrepreneurs) wanted to create jobs and improve the physical appearance of the city. We needed to change the local economic focus, which primarily involved bars, cabarets, prostitution and divorces.
Taking advantage of my uncle’s position with the National Border Program of Mexico (a development trust fund), we succeeded in having the fund contract Arthur D. Little, a Boston area think tank and consulting firm, to conduct a study labeled “Promoting New Industries for Ciudad Juarez”.
Dr. Rick Bolin led the study, which was concluded in October 1964. The report recommended the creation of a fiscal zone for the free movement of goods, along with the establishment of an industrial park and an industrial marketing program.
In spite of opposition from the Ministry of Taxes and Credit (Hacienda), the maquiladora industry was born on May 18th 1965 with the decisive help from my uncle, Antonio J. Bermudez and Octaviano Campos Salas, the Minister of Industry & Commerce at the time. The official “birth” of the industry took place at the San Antonio Hotel in Ciudad Juarez, after authorization was granted to Mexican customs for the temporary importation of goods and equipment for in-bond processing.
Who were your first clients and what industrial project did they have?
Our first project, “Acapulco Fashions”, was located in a commercial building in Juarez. They sewed and assembled brassieres. But the first large-scale project, located in an industrial park, was an 115,000-square foot RCA television assembly facility in Ciudad Juarez. I can tell you that for Juarez, at that time, this was a huge plant, and a major project.
Please describe your first development and the obstacles you faced.
The first industrial park in Juarez was originally meant to be a federal development. The National Border Program of Mexico actually purchased about 800 hectares west of the Juarez airport and RCA was to be located at that site. But by the time the 120-liter/second water well was ready, and the access road was half built, my uncle was replaced. The new officer called us insane and cancelled the project. He even wanted to charge us Arthur D. Little’s fee for the study.
We convinced RCA to relocate to a cotton growing farm field that I co-owned with Tomas Fernandez Campos. After merging other Bermudez family land pieces, the “Antonio J. Bermudez” industrial Park was born, and it eventually became the largest modern industrial park in Mexico with over 50,000 employees
A global investment company by the name of Adela (Aid for Development in Latin America) based in Zurich, became a venture capital stockholder in the park.
RCA’s ribbon cutting ceremony took place in the month of November in 1969; about 6 years had lapsed since the seeds of industrialization had been planted in Juarez.
Former El Paso Mayor Judson Williams was a very strong ally in promoting the establishment of more maquiladoras in Juarez. He understood very clearly the benefits El Paso would get from the jobs created in Juarez.
How has the industry changed over the last 40 years?
The behavior of US direct foreign investors during US recessions is interesting. When recession hit the US in the 70’s, many operations were reduced. But during the economic downturn of the 80’s, we actually grew because US companies looked for a low cost alternative.
The recession of the early 90’s also resulted in growth for our industry, although much of that growth was leveraged by NAFTA. In the most recent US recession, the shrinkage of the industry was very large due to the many alternative low cost manufacturing destinations.
In your early years, did you foresee that Juarez’ industrial development would be as it is today?
I’m on record in early 70’s newspapers stating that Juarez was to become more industrialized than Monterrey. At the time, I certainly drew a lot of laughs. Today, on a per capita basis, I don’t think there is another city in Mexico as industrialized as Juarez. We have a population of 1.4 million and close to 300,000 manufacturing jobs.
What is the big opportunity that Mexico missed in its industrial development?
The fact that we failed to become an important supplier to the maquiladora industry is undoubtedly our most painful mistake. We conducted the first “Suppliers Tradeshow” in 1976, and the foreign companies of Juarez were very collaborative; RCA, GE, all of them.
With samples in our briefcases we took buyers to Mexico City and met with the government and some of the biggest Mexican manufacturers, who were not enthusiastic when they learned about globally competitive prices, large quantities, and high- quality standards.
The government did not support the few Mexican companies that supplied maquiladoras with competitive loans that could significantly increase their shipments.
What should Mexico do to improve its competitiveness?
Education is the number one priority. If we want to improve the level of worker salaries and the technological sophistication of our manufacturing processes, we need to make a huge effort to improve education.
Also, the government must understand that it has to be supportive of Mexican industries in order for them to be competitive globally. If we don’t provide parts and components to the foreign plants, we are going to lose them; they want to be near their suppliers.
The easiest way to improve shipments by Mexican suppliers to maquiladoras is through soft government loans to existing Mexican suppliers. With this capital they could duplicate, triplicate their business.
We also need to expedite the international crossing of shipments. It takes 3 to 5 hours to clear customs at the Juarez-El Paso border. This same procedure takes only 15 minutes in the U.S. – Canadian border. It is a big difference which is hard to understand.
9/11 changed the world, creating big problems but also opportunities. By nature of their proximity, Mexico and Canada are the most important allies to the US. In Mexico we need to promote ourselves as a haven for US and Mexican companies that manufacture military supplies at competitive prices. These supplies, if manufactured in China, Taiwan or North Korea, would be a long-term military and security threat to our neighbors.
We need to concentrate our efforts on products that we can manufacture competitively, by virtue of our location and experience.
This interview was conducted in 2003 in Cozumel. The concepts explained by Don Jaime Bermudez then continue to be fundamental issues today and into the future of the industry.